flyExclusive(FLYX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents flyExclusive, Inc.'s unaudited consolidated financial statements and management's financial analysis Item 1. Financial Statements This section presents flyExclusive, Inc.'s unaudited consolidated financial statements, including balance sheets, income, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets (Unaudited) Total assets decreased to $443.4 million, liabilities to $496.0 million, and stockholders' deficit worsened to $(254.9) million Condensed Consolidated Balance Sheets (Unaudited) | Metric | Dec 31, 2024 (Revised, in thousands) | Jun 30, 2025 (in thousands) | Change (in thousands) | | :-------------------------- | :--------------------------------- | :-------------------------- | :-------------------- | | Cash and cash equivalents | $31,694 | $15,819 | $(15,875) | | Investments in securities | $65,541 | $0 | $(65,541) | | Total current assets | $143,969 | $65,508 | $(78,461) | | Total assets | $538,290 | $443,443 | $(94,847) | | Total current liabilities | $294,753 | $260,169 | $(34,584) | | Total liabilities | $549,962 | $496,036 | $(53,926) | | Total stockholders' (deficit) / equity | $(210,058) | $(254,904) | $(44,846) | Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) Net loss improved to $(39.2) million for the six months ended June 30, 2025, with revenue up 12.9% to $179.5 million, aided by warrant fair value changes Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - Six Months Ended June 30 | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Revenue | $179,457 | $158,985 | $20,472 | 12.9% | | Total costs and expenses | $206,553 | $208,252 | $(1,699) | (0.8)% | | Loss from operations | $(27,096) | $(49,267) | $22,171 | (45.0)% | | Net loss | $(39,176) | $(60,844) | $21,668 | (35.6)% | | Net loss attributable to flyExclusive, Inc. | $(10,213) | $(10,994) | $781 | (7.1)% | | Basic and Diluted EPS | $(0.55) | $(0.67) | $0.12 | (17.9)% | Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - Three Months Ended June 30 | Metric (Three Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Revenue | $91,332 | $79,013 | $12,319 | 15.6% | | Total costs and expenses | $103,692 | $100,855 | $2,837 | 2.8% | | Loss from operations | $(12,360) | $(21,842) | $9,482 | (43.4)% | | Net loss | $(16,129) | $(27,854) | $11,725 | (42.1)% | | Net loss attributable to flyExclusive, Inc. | $(4,764) | $(5,153) | $389 | (7.5)% | | Basic and Diluted EPS | $(0.26) | $(0.32) | $0.06 | (18.8)% | Condensed Consolidated Statements of Stockholders' Equity (Deficit) / Members' Equity (Deficit) and Temporary Equity (Unaudited) Accumulated deficit increased to $(287.0) million, with temporary equity from redeemable noncontrolling interest and preferred stock showing changes Condensed Consolidated Statements of Stockholders' Equity (Deficit) / Members' Equity (Deficit) and Temporary Equity (Unaudited) | Metric | Dec 31, 2024 (Revised, in thousands) | Jun 30, 2025 (in thousands) | Change (in thousands) | | :------------------------------------------ | :--------------------------------- | :-------------------------- | :-------------------- | | Redeemable noncontrolling interest | $159,514 | $155,122 | $(4,392) | | Series A preferred stock | $23,799 | $25,838 | $2,039 | | Series B preferred stock | $15,073 | $21,351 | $6,278 | | Additional paid-in capital | $0 | $25,599 | $25,599 | | Accumulated deficit | $(233,441) | $(286,958) | $(53,517) | | Total flyExclusive stockholders' (deficit) / equity | $(233,489) | $(261,351) | $(27,862) | | Noncontrolling interests | $23,431 | $6,447 | $(16,984) | | Total stockholders' (deficit) / equity | $(210,058) | $(254,904) | $(44,846) | - The company corrected an error in prior period financial statements related to the allocation of redeemable non-controlling interest accretion, which had no impact on previously reported loss from operations, net loss, loss per share, temporary equity, or permanent equity[36] Condensed Consolidated Statements of Cash Flows (Unaudited) Net cash decreased by $15.9 million, primarily from $87.7 million used in financing and $10.1 million in operations, offset by $81.9 million from investing Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :-------------------------------------------- | :------------------ | :------------------ | :-------------------- | | Net cash flows from operating activities | $(10,101) | $(42,170) | $32,069 | | Net cash flows from investing activities | $81,949 | $3,451 | $78,498 | | Net cash flows from financing activities | $(87,723) | $36,432 | $(124,155) | | Net increase (decrease) in cash and cash equivalents | $(15,875) | $(2,287) | $(13,588) | | Cash and cash equivalents at end of period | $15,819 | $9,339 | $6,480 | - Cash used in operating activities significantly decreased from $42.17 million in 2024 to $10.10 million in 2025, primarily due to a lower net loss and favorable changes in certain non-cash adjustments[241][358][359] - Investing activities provided substantial cash in 2025 ($81.95 million) compared to 2024 ($3.45 million), driven by higher proceeds from sales of property and equipment and investments[241][361][362] - Financing activities shifted from providing cash in 2024 ($36.43 million) to using significant cash in 2025 ($87.72 million), mainly due to higher debt repayments and net cash distributions to non-controlling interests[27][363][364] Notes to Condensed Consolidated Financial Statements (Unaudited) This section details accounting policies and financial line items, covering organization, EPS, segments, fair value, VIEs, revenue, and asset/liability accounts 1. Organization and Operations flyExclusive operates a private jet charter and MRO business; despite deficits, management expects sufficient liquidity for 12 months post-December 2023 merger - flyExclusive is a premier owner/operator of jet aircraft and aircraft sales, focusing on private jet charter, with offerings including ad hoc flights, jet club, partnership, and fractional programs[30] - The company launched its MRO operations in 2021, providing maintenance and refurbishment services to third parties and its own fleet[31] - On December 27, 2023, EG Acquisition Corp. and LGM consummated a business combination (Merger), with EGA changing its name to flyExclusive, Inc[32] - As of June 30, 2025, the Company had an accumulated deficit of $286.96 million and a working capital deficit of $194.66 million; net losses were $39.18 million for the six months ended June 30, 2025[42] - Management believes current cash, operating cash flows, and fractional program proceeds will fund operations for at least 12 months, but additional capital may be needed for growth[45] 2. Summary of Significant Accounting Policies Key accounting policies include estimates, single operating segment, warrant classification, noncontrolling interests, aircraft sales, and recent accounting pronouncements - The company operates and manages its business as one operating segment: private aviation services, with all ancillary revenue sources supporting this core service[47] - Public Warrants, Private Placement Warrants, and Series A Penny Warrants are classified as derivative liabilities and measured at fair value, with changes recognized in the income statement[50][51] - Series B Penny Warrants are classified as permanent equity because they are indexed to the Company's own stock and settled in a fixed number of Class A Common Stock shares[50] - Redeemable noncontrolling interest is classified as temporary equity because redemption for cash is not solely within the company's control, and changes in redemption value are accreted using the interest method[63][64] - Aircraft held for sale are recorded at the lower of carrying value and fair value less costs to sell, with depreciation discontinued[69] - The company adopted ASU 2023-07 (Segment Reporting) in Q4 2024, expanding segment disclosures, and is evaluating ASU 2024-03 (Expense Disaggregation) for future impact[75][77] 3. Earnings (Loss) Per Share Basic and diluted EPS improved to $(0.55) from $(0.67) for the six months ended June 30, 2025, based on net loss and weighted average shares Earnings (Loss) Per Share | Metric (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Basic Net loss attributable to common stockholders (in thousands) | $(14,549) | $(12,251) | | Weighted Average Common Shares Outstanding (Basic & Diluted) | 26,471,721 | 18,237,732 | | Basic and Diluted Earnings (Loss) Per Share | $(0.55) | $(0.67) | - Weighted average shares issuable under Series A and Series B Penny Warrants are included in the denominator for basic and diluted EPS calculations[78][79] - Potentially dilutive securities, including Public Warrants, Private Placement Warrants, Series A Penny Warrants, and Class B Common Stock, were excluded from diluted EPS calculation because their effect would have been anti-dilutive[79] 4. Segment Information flyExclusive operates as a single reportable segment, private aviation services, encompassing charters, fractional ownership, MRO, and aircraft management - The company has one reportable segment, private aviation services, managed on a consolidated basis by the CEO[80] - The private aviation services segment encompasses charters, aircraft partnerships, jet club memberships, fractional ownership shares, MRO, and aircraft management services[81] Segment Information | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Total Revenue | $179,457 | $158,985 | | Cost of revenue | $154,434 | $146,989 | | Selling, general and administrative | $41,288 | $46,673 | | Depreciation and amortization | $12,021 | $13,173 | | Net Loss | $(39,176) | $(60,844) | 5. Fair Value Measurements Assets and liabilities are measured at fair value, classified into Level 1 (cash equivalents), Level 2 (Private Placement Warrants), and Level 3 (Series A Penny Warrants) Fair Value Measurements at June 30, 2025 | Fair Value Measurements at June 30, 2025 (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------------- | :------ | :------ | :------ | :---- | | Cash equivalents: Money market mutual funds | $5,156 | — | — | $5,156 | | Warrant liability - public warrants | $277 | — | — | $277 | | Warrant liability - private placement warrants | — | $476 | — | $476 | | Warrant liability - Series A penny warrants | — | — | $1,480 | $1,480 | | Total Liabilities | $277 | $476 | $1,480 | $2,233 | Fair Value Measurements at December 31, 2024 | Fair Value Measurements at December 31, 2024 (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------------ | :------ | :------ | :------ | :---- | | Cash equivalents: Money market mutual funds | $2,710 | — | — | $2,710 | | Investments in Securities | $849 | $64,692 | — | $65,541 | | Total Assets | $3,559 | $64,692 | — | $68,251 | | Warrant liability - public warrants | $454 | — | — | $454 | | Warrant liability - private placement warrants | — | $780 | — | $780 | | Warrant liability - Series A penny warrants | — | — | $1,780 | $1,780 | | Total Liabilities | $454 | $780 | $1,780 | $3,014 | - The fair value of Series A Penny Warrants is determined using a Monte Carlo simulation with unobservable inputs for volatility, classifying it as a Level 3 measurement[88] 6. Variable Interest Entities The company consolidates Variable Interest Entities (VIEs), including single-asset LLCs and a paint facility, as the primary beneficiary - flyExclusive has variable interests in single-asset LLCs (SAEs) holding aircraft and a Paint Entity, which are classified as VIEs[92][94] - The company is the primary beneficiary of these VIEs, consolidating their financial statements, due to its control over their activities and exposure to their economic performance[95][96] VIE Assets and Liabilities | VIE Assets and Liabilities (in thousands) | June 30, 2025 | Dec 31, 2024 | | :-------------------------------------- | :------------ | :----------- | | Cash | $655 | $737 | | Property and equipment, net | $55,685 | $61,769 | | Long-term notes payable, current portion | $7,565 | $7,690 | | Long-term notes payable, non-current portion | $26,244 | $29,619 | - The company provided financial contributions to VIEs of $633 thousand and $260 thousand during the six months ended June 30, 2025 and 2024, respectively[98] 7. Revenue Revenue is disaggregated by service type, with flights as the largest component; deferred revenue decreased from $149.5 million to $144.4 million Revenue by Service Type | Revenue by Service Type (Six Months Ended June 30, in thousands) | 2025 | 2024 | | :------------------------------------------------- | :-------- | :-------- | | Flights | $168,516 | $150,504 | | Aircraft Management Services | $1,317 | — | | Memberships | $1,323 | $2,806 | | MRO | $4,633 | $3,734 | | Fractional ownership purchase price | $3,668 | $1,941 | | Total Revenue | $179,457 | $158,985 | Deferred Revenue Rollforward | Deferred Revenue Rollforward (Six Months Ended June 30, 2025, in thousands) | Amount | | :-------------------------------------------------------- | :-------- | | Balance as of December 31, 2024 | $149,517 | | Revenue recognized | $(160,006) | | Revenue deferred | $154,852 | | Balance as of June 30, 2025 | $144,363 | - Revenue streams include membership fees and flight charges for Jet Club and Charter, time and materials for MRO, allocated purchase price and flight charges for Fractional Ownership, and fixed monthly fees for Aircraft Management Services[102] 8. Other Receivables Other receivables, primarily federal excise tax and rebate receivables, increased from $7.1 million to $7.9 million Other Receivables | Other Receivables (in thousands) | June 30, 2025 | Dec 31, 2024 | | :----------------------------- | :------------ | :----------- | | Rebate receivables | $1,256 | $1,117 | | Federal excise tax receivable | $6,121 | $5,414 | | Insurance settlement in process | $15 | — | | Income tax receivable | $460 | $460 | | Other | $44 | $149 | | Total | $7,896 | $7,140 | 9. Parts and Supplies Inventory Parts and supplies inventory, net of reserve, increased from $5.7 million to $6.3 million due to higher materials Parts and Supplies Inventory | Parts and Supplies Inventory (in thousands) | June 30, 2025 | Dec 31, 2024 | | :---------------------------------------- | :------------ | :----------- | | Aircraft parts | $5,206 | $5,101 | | Materials and supplies | $1,325 | $753 | | Less: parts and supplies inventory reserve | $(206) | $(196) | | Total | $6,325 | $5,658 | 10. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets increased from $7.8 million to $9.4 million, driven by higher prepaid insurance Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets (in thousands) | June 30, 2025 | Dec 31, 2024 | | :----------------------------------------------------- | :------------ | :----------- | | Prepaid vendor expenses | $3,109 | $3,239 | | Prepaid insurance | $3,133 | $690 | | Prepaid directors and officers insurance | $1,097 | $2,032 | | Prepaid maintenance | $391 | $154 | | Prepaid non-aircraft subscriptions | $187 | $407 | | MRO revenue in excess of billings | $672 | $326 | | Deferred commission | $854 | $923 | | Total | $9,443 | $7,771 | 11. Investments in Securities The company held no investments in securities as of June 30, 2025, a significant change from $65.5 million in bonds at December 31, 2024 - The company had no investments in securities as of June 30, 2025[106] Investments in Securities at December 31, 2024 | Investments in Securities at December 31, 2024 (in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :---------------------------------------------------------- | :------------- | :--------------------- | :---------------------- | :--------- | | U.S. Treasury bills | $55,009 | $190 | — | $55,199 | | Municipal bonds | $9,631 | $38 | $(351) | $9,318 | | Corporate/government bonds | $479 | $33 | — | $512 | | Other bonds | $478 | $34 | — | $512 | | Total | $65,597 | $295 | $(351) | $65,541 | 12. Property and Equipment, Net Property and equipment, net, decreased from $259.9 million to $232.8 million, due to reduced transportation equipment and increased depreciation Property and Equipment, Net | Property and Equipment, Net (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--------------------------------------- | :------------ | :----------- | | Transportation equipment | $303,458 | $329,416 | | Deposits on transportation equipment | $17,269 | $14,165 | | Less: Accumulated depreciation | $(93,805) | $(89,487) | | Property and equipment, net | $232,781 | $259,874 | - Depreciation expense for property and equipment was $10.97 million for the six months ended June 30, 2025, compared to $12.52 million for the same period in 2024[108] 13. Intangible Assets Intangible assets, net, decreased from $1.6 million to $1.3 million due to software amortization; the FAA certificate remains at $0.7 million Intangible Assets, Net | Intangible Assets, Net (in thousands) | June 30, 2025 | Dec 31, 2024 | | :------------------------------------ | :------------ | :----------- | | Software - in service | $676 | $950 | | FAA certificate | $650 | $650 | | Total acquired intangible assets | $1,326 | $1,600 | - Amortization of intangible assets was $297 thousand for the six months ended June 30, 2025, compared to $602 thousand for the same period in 2024[110] Estimated Amortization Expense | Estimated Amortization Expense | Amount (in thousands) | | :----------------------------- | :-------------------- | | Remainder of 2025 | $256 | | 2026 | $332 | | 2027 | $87 | | 2028 | $1 | | 2029 | — | | Thereafter | — | | Total | $676 | 14. Other Current Liabilities Other current liabilities remained stable at $30.2 million, with $9.0 million in ERC payments classified as a liability due to eligibility uncertainty Other Current Liabilities | Other Current Liabilities (in thousands) | June 30, 2025 | Dec 31, 2024 | | :------------------------------------- | :------------ | :----------- | | Accrued vendor payments | $6,322 | $6,528 | | Accrued ERC payments | $9,044 | $9,044 | | Accrued directors and officers insurance | $1,780 | $1,780 | | Accrued employee-related expenses | $9,595 | $10,239 | | Accrued engine expenses | $932 | $713 | | Accrued tax expenses | $1,496 | $1,072 | | Accrued interest | $920 | $472 | | Other | $96 | $96 | | Total | $30,185 | $29,944 | - The company has received $9.04 million in Employee Retention Credit (ERC) payments but has classified this amount as a current liability due to uncertainty regarding eligibility[115] 15. Other Non-Current Liabilities Other non-current liabilities, primarily fractional ownership deposits, increased from $30.3 million to $36.7 million Other Non-Current Liabilities | Other Non-Current Liabilities (in thousands) | June 30, 2025 | Dec 31, 2024 | | :----------------------------------------- | :------------ | :----------- | | Fractional ownership deposits | $36,716 | $30,342 | | Other | — | — | | Total | $36,716 | $30,342 | 16. Debt Total long-term notes payable decreased from $189.1 million to $111.7 million due to repayments and a closed revolving line of credit Short-term notes payable | Short-term notes payable (in thousands) | June 30, 2025 | Dec 31, 2024 | | :------------------------------------ | :------------ | :----------- | | Bank 1 | $3,160 | — | | Bank 2 | $5,155 | $5,962 | | Total short-term notes payable | $8,315 | $5,962 | Long-term notes payable | Long-term notes payable (in thousands) | June 30, 2025 | Dec 31, 2024 | | :------------------------------------- | :------------ | :----------- | | Total Long-term notes payable | $111,733 | $189,143 | | Less: Unamortized debt issuance costs and debt discount | $(180) | $(233) | | Less: current portion | $(19,552) | $(84,883) | | Long-term notes payable, non-current portion | $92,001 | $104,027 | - The company closed its $60 million revolving line of credit in March 2025, with the full $59.54 million balance paid[146] - The company was not in compliance with certain financial covenants as of December 31, 2024, but obtained waiver letters from lenders; as of June 30, 2025, the aggregate balance of debt with waivers was $0[147][149] - New long-term promissory notes were issued in February, March, April, and May 2024, totaling approximately $38.5 million, with varying interest rates and maturity dates[151][152] - A Senior Secured Note of up to $25.77 million was entered into in January 2024 to finance aircraft for the fractional ownership program, with an interest rate of 13.00% for withdrawn amounts[195][197] 17. Leases The company has various operating and finance lease arrangements for real estate and aircraft, with lease costs totaling $13.7 million and significant future obligations - The company leases real estate and 35 aircraft (as of June 30, 2025) under non-cancellable operating leases, and 2 aircraft under finance leases[153] Lease Costs | Lease Costs (Six Months Ended June 30, in thousands) | 2025 | 2024 | | :------------------------------------------------- | :-------- | :-------- | | Operating lease cost | $11,244 | $10,787 | | Short-term lease cost | $905 | $727 | | Finance lease cost: Amortization of right-of-use assets | $695 | — | | Finance lease cost: Interest on lease liabilities | $819 | — | | Total lease costs | $13,663 | $11,514 | Future Operating Lease Payments as of June 30, 2025 | Future Operating Lease Payments as of June 30, 2025 (in thousands) | Amount | | :--------------------------------------------------------------- | :-------- | | Remainder of 2025 | $10,681 | | 2026 | $19,775 | | 2027 | $15,210 | | 2028 | $7,896 | | 2029 | $5,395 | | Thereafter | $40,524 | | Total undiscounted cash flows | $99,481 | | Present value of lease liabilities | $69,690 | Future Finance Lease Payments as of June 30, 2025 | Future Finance Lease Payments as of June 30, 2025 (in thousands) | Amount | | :--------------------------------------------------------------- | :-------- | | Remainder of 2025 | $3,972 | | 2026 | $6,736 | | 2027 | $5,445 | | 2028 | $4,411 | | 2029 | $3,121 | | Thereafter | $790 | | Total undiscounted cash flows | $24,475 | | Present value of lease liabilities | $20,737 | Future Repurchase Contingencies as of June 30, 2025 | Future Repurchase Contingencies as of June 30, 2025 (in thousands) | Amount | | :--------------------------------------------------------------- | :-------- | | Remainder of 2025 | $2,400 | | 2026 | $21,562 | | 2027 | $23,486 | | 2028 | $5,037 | | 2029 | $5,556 | | Thereafter | $1,642 | | Total | $59,683 | 18. Warrant Liabilities Public, Private Placement, and Series A Penny Warrants are derivative liabilities; Series B Penny Warrants are equity; a $0.8 million gain on warrant fair value was recorded - Public Warrants, Private Placement Warrants, and Series A Penny Warrants are classified as derivative liabilities and remeasured at fair value each reporting period[163] - As of June 30, 2025, there were 4,333,333 Private Placement Warrants and 2,519,869 Public Warrants outstanding, in addition to Penny Warrants[166] - For the six months ended June 30, 2025, the company recorded a gain of $781 thousand on the change in fair value of warrants, compared to a loss of $3.68 million for the same period in 2024[168] Warrant Liabilities | Warrant Liabilities (in thousands) | June 30, 2025 | Dec 31, 2024 | | :------------------------------- | :------------ | :----------- | | Total Warrant Liabilities | $2,233 | $3,014 | 19. Employee Benefits The company offers a 401(k) plan with a 50% match on the first 8% of compensation, vesting after 2 years, with $0.9 million in contributions - The company matches 50% of the first 8% of employee contributions to its 401(k) plan, with 100% vesting after 2 years of service[169] - Company contributions to the 401(k) plan were $905 thousand for the six months ended June 30, 2025, compared to $839 thousand for the same period in 2024[170] 20. Stock-based Compensation The 2023 Equity Incentive Plan has 6 million shares reserved, with $7.9 million unrecognized compensation expense; the ESPP has 1.5 million shares reserved but no purchases - The 2023 Equity Incentive Plan has 6,000,000 shares of Class A Common Stock reserved for future issuance, with 1,200,000 shares available as of June 30, 2025[172] - Unrecognized compensation expense associated with outstanding stock options was $7.94 million at June 30, 2025[172] - The Employee Stock Purchase Plan (ESPP) has 1,500,000 shares of Class A Common Stock reserved, but no shares have been purchased by employees as of June 30, 2025[175] 21. Income Taxes The effective tax rate was 0% due to losses allocated to non-controlling interest, with a full valuation allowance against deferred tax assets - The company's effective tax rate was 0% for the three and six months ended June 30, 2025, differing from the statutory rate of 21% due to losses allocated to non-controlling interest[177] - A full valuation allowance has been recorded against deferred tax assets as of June 30, 2025, and will be maintained until sufficient evidence supports its reversal[178] - Tax years from 2021 to present generally remain open to examination by relevant taxing jurisdictions[179] 22. Related Party Transactions The company engages in regular related party transactions, including fuel purchases, leases, and charter revenue, with its majority owner's entities, reporting related receivables, payables, and notes - The company purchased $706 thousand in fuel from LGMV subsidiaries for the six months ended June 30, 2025, representing approximately 2% of total fuel purchases[182] - Rent expense to LGMV subsidiaries totaled $2.07 million for the six months ended June 30, 2025[183] - Charter flight revenue from owners of subsidiaries and Lessor VIEs was $7.29 million for the six months ended June 30, 2025[185] - Short-term accounts receivable from related parties totaled $1.23 million as of June 30, 2025[187] - A senior secured note of $15.87 million was issued to the Sponsor in December 2023, with a 14% interest rate and maturity extended to January 1, 2027[189] - An additional promissory note with the EGA Sponsor for $3.95 million was cancelled on March 21, 2025, in exchange for Series B Preferred Stock and warrants[191][193] 23. Commitments and Contingencies The company faces a legal dispute with Wheels Up, a Tax Receivable Agreement with potential $7 million payment, and $59.7 million in future leased aircraft repurchase contingencies - flyExclusive is involved in a lawsuit with Wheels Up Partners, LLC (WUP) following the termination of their Fleet Guaranteed Revenue Program Agreement, with WUP alleging breach of contract and seeking unspecified compensatory damages[203][204] - The company has a Tax Receivable Agreement (TRA) with existing equity holders, potentially requiring a lump sum payment of up to $7 million upon an Early Termination Event[207][209] Future Repurchase Contingencies as of June 30, 2025 | Future Repurchase Contingencies as of June 30, 2025 (in thousands) | Amount | | :--------------------------------------------------------------- | :-------- | | Remainder of 2025 | $2,400 | | 2026 | $21,562 | | 2027 | $23,486 | | 2028 | $5,037 | | 2029 | $5,556 | | Thereafter | $1,642 | | Total | $59,683 | 24. Stockholders' Equity / Members' Deficit and Noncontrolling Interests Authorized stock includes preferred and common shares; Series A and B Preferred Stock are temporary equity, and redeemable noncontrolling interest was $155.1 million - The company is authorized to issue 325,000,000 shares, including 25,000,000 preferred, 200,000,000 Class A Common, and 100,000,000 Class B Common shares[213] - 25,000 shares of Series A Preferred Stock were issued in March 2024, accruing dividends annually and subject to redemption by the company or holder after certain anniversaries[214][216][220] - 29,737 shares of Series B Preferred Stock were issued in August 2024 and March 2025, accruing dividends quarterly and automatically converting to Class A Common Stock by December 31, 2025, or upon a Subsequent Capital Raise[225][226][228][233] - Both Series A and Series B Preferred Stock are classified as temporary equity due to redemption rights outside the company's control[223][232] - The redeemable noncontrolling interest, related to 59,930,000 LGM Common Units, was $155.12 million at June 30, 2025[237][239] - Noncontrolling interests in consolidated entities are comprised of varying ownership percentages across 11 entities, with net income/loss allocated proportionally[247][248] 25. Subsequent Events On July 25, 2025, a lock-up restriction on 5.6 million Class A common shares and warrants was waived for EG Sponsor LLC, aiming for a Russell 2000 Index listing - On July 25, 2025, the company waived a lock-up restriction on 5,625,000 Class A common shares and warrants owned by EG Sponsor LLC to facilitate a potential Russell 2000 Index listing[249] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section overviews flyExclusive's vertically integrated private aviation business, discussing key operational factors, non-GAAP measures, operating metrics, financial results, liquidity, and critical accounting policies - flyExclusive aims to be the world's most vertically integrated private aviation company, focusing on capital-efficient growth, industry-leading pricing, optimal dispatch availability, in-house training, and a controlled premium customer experience[251] - The company's business model is diversified, generating charter revenue through jet club, fractional, and MRO programs, and operates as one reportable segment: private aviation services[252] - Key factors affecting results include economic conditions, competition, pilot availability, the termination of the Wheels Up agreement, and fleet modernization efforts[260][261][263][264][266] - The company uses non-GAAP measures like Adjusted EBITDA and Adjusted EBITDAR to assess operating performance and adjust for non-cash and non-core expenses[275][276] Overview of Our Business flyExclusive is a vertically integrated private aviation company with over 100 aircraft, offering jet club, fractional ownership, MRO, and new aircraft management services - flyExclusive operates a fleet of over 100 owned and leased aircraft, including various Citation and Challenger models, and aims for vertical integration in private aviation[251] - The company's diversified business model includes jet club membership, fractional ownership, and MRO programs, all contributing to charter revenue[252] - In September 2024, flyExclusive entered an Aircraft Management Services Agreement with Volato Group, Inc., becoming the exclusive provider of such services to Volato, with an option to merge with Volato[257][258][259] Key Factors Affecting Results of Operations Key factors include economic conditions, competition, pilot availability, Wheels Up agreement termination, fleet modernization, and $23.6 million CARES Act support, with $9.0 million ERC received - Economic downturns could reduce demand for private aviation services, as customers may view it as a luxury, impacting jet club growth and program interest[260] - The private aviation market is highly competitive, with factors like price, reliability, safety, and aircraft availability influencing market share[262] - Volatility in pilot attrition due to training delays and wage increases in the industry poses a risk to operations and financial results[263] - The termination of the GRP Agreement with Wheels Up in June 2023 had a material impact on revenue, with $59.0 million in billed but unrecorded amounts through June 30, 2025[264] - The company is modernizing its fleet by selling older aircraft and replacing them with newer models to improve availability and operating efficiency, expecting this to continue through fiscal 2025[266] - The company received $23.6 million in grants under the CARES Act's Payroll Support Program and has applied for $9.5 million in Employee Retention Credits, receiving $9.0 million, though eligibility is still uncertain[268][271] Non-GAAP Financial Measures flyExclusive uses non-GAAP measures, Adjusted EBITDA and Adjusted EBITDAR, to supplement GAAP results, adjusting net loss for interest, taxes, D&A, non-recurring items, and aircraft lease costs - Adjusted EBITDA and Adjusted EBITDAR are non-GAAP measures used to assess operating performance and provide supplemental information to investors[273][275][276] - Adjusted EBITDA is calculated by adjusting net loss for interest, income tax, depreciation and amortization, litigation costs, acquisition costs, equity-based compensation, non-cash loss on assets held for sale, realized losses on aircraft sold, loss on extinguishment of debt, change in fair value of warrant liabilities, and SOX control remediation[275] - Adjusted EBITDAR further adjusts Adjusted EBITDA for aircraft lease costs, offering an alternative view that accounts for different aircraft acquisition methods (outright purchase, finance lease, operating lease)[276] Adjusted EBITDA and Adjusted EBITDAR Reconciliation | Adjusted EBITDA and Adjusted EBITDAR Reconciliation (Six Months Ended June 30, in thousands) | 2025 | 2024 | | :--------------------------------------------------------------------------------------- | :-------- | :-------- | | Net loss | $(39,176) | $(60,844) | | Interest income | $(939) | $(2,440) | | Interest expense | $9,817 | $10,321 | | Depreciation and amortization | $12,021 | $13,173 | | Loss on extinguishment of debt | $4,161 | — | | Change in fair value of warrant liabilities | $(781) | $3,679 | | Adjusted EBITDA | $(11,598) | $(35,485) | | Aircraft lease costs | $10,290 | $10,167 | | Adjusted EBITDAR | $(1,307) | $(25,318) | Key Operating Metrics Key operating metrics, including members contributing to revenues (up 32% YoY) and total flight hours (up 9.7% YoY), are monitored for business performance Key Operating Metrics | Key Operating Metrics | June 30, 2025 | June 30, 2024 | Change (%) | | :-------------------- | :------------ | :------------ | :--------- | | Ending aircraft on certificate | 93 | 93 | 0.0% | | Total aircraft operated | 93 | 93 | 0.0% | | Members contributing to revenues* | 1,077 | 816 | 32.0% | | Active members | 984 | 723 | 36.1% | | Average aircraft on certificate | 96 | 98 | (2.0)% | | Aircraft contributing to revenues | 86 | 91 | (5.5)% | | Total flight hours | 35,947 | 32,770 | 9.7% | | Total hours per aircraft | 374.8 | 333.5 | 12.4% | | Members per aircraft* | 12.5 | 9.7 | 28.9% | - Members contributing to revenues increased by 32.0% for the six months ended June 30, 2025, reflecting growth in contractual retail members[281][282] - Total flight hours increased by 9.7% for the six months ended June 30, 2025, indicating increased usage of programs and fleet scale[281][287] - Total hours per aircraft increased by 12.4% to 374.8, suggesting improved operational efficiency and aircraft utilization[281][288] - 97.1% of customers were fulfilled on the company's fleet without reliance on third parties for the six months ended June 30, 2025[289] Components of Results of Our Operations This section details revenue components (charter, MRO, aircraft management) and expense components (cost of revenue, SG&A, D&A, aircraft sales gains/losses, other income/expense) - Revenue sources include charter flights (jet club, fractional, wholesale, retail), MRO services, and aircraft management fees[290] - Jet club revenue and membership fees are recognized monthly as the company stands ready to provide flight services[291] - Fractional revenue from ownership interests is recognized over the contract term on a straight-line basis, with variable flight service consideration recognized in the period of performance[293] - MRO revenue is recognized over time based on the cost of parts and supplies consumed and labor hours worked[294] - Cost of revenue includes aircraft lease costs, fuel, payroll, crew travel, insurance, maintenance, subscriptions, and third-party flight costs[296] - Selling, general and administrative expenses cover non-flight related employee compensation, professional fees, corporate travel, advertising, and corporate lease expenses[297] Results of Operations This section provides a comparative analysis of flyExclusive's financial performance for the six and three months ended June 30, 2025, detailing changes in revenue, costs, and other items Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024 For the six months ended June 30, 2025, revenue increased 12.9% to $179.5 million, and net loss improved 35.6% to $(39.2) million due to lower SG&A and favorable warrant fair value changes Financial Performance - Six Months Ended June 30 | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Revenue | $179,457 | $158,985 | $20,472 | 12.9% | | Cost of revenue | $154,434 | $146,989 | $7,445 | 5.1% | | Selling, general and administrative | $41,288 | $46,673 | $(5,385) | (11.5)% | | Loss from operations | $(27,096) | $(49,267) | $22,171 | (45.0)% | | Net loss | $(39,176) | $(60,844) | $21,668 | (35.6)% | Revenue by Type - Six Months Ended June 30 | Revenue by Type (Six Months Ended June 30, in thousands) | 2025 | 2024 | Change (in thousands) | Change (%) | | :------------------------------------------------------- | :-------- | :-------- | :-------------------- | :--------- | | Jet club and charter | $156,452 | $146,917 | $9,535 | 6.5% | | Fractional ownership | $17,055 | $8,334 | $8,721 | 104.6% | | Maintenance, repair, and overhaul | $4,633 | $3,734 | $899 | 24.1% | | Aircraft management services | $1,317 | — | $1,317 | 100.0% | - Cost of revenue increased by $7.4 million (5.1%), primarily due to increases in overhaul program expense, affiliate lift expense, and salaries/wages, partially offset by a decrease in fuel expenses[309][311] - Selling, general and administrative expenses decreased by $5.4 million (11.5%), mainly due to lower professional fees, advertising, marketing, and bad debt expense, reflecting cost optimization efforts[310][312] - The change in fair value of warrant liabilities resulted in a $4.5 million positive impact, shifting from a loss in 2024 to a gain in 2025[305][317] Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024 For the three months ended June 30, 2025, revenue increased 15.6% to $91.3 million, and net loss improved 42.1% to $(16.1) million due to lower SG&A and interest expense Financial Performance - Three Months Ended June 30 | Metric (Three Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Revenue | $91,332 | $79,013 | $12,319 | 15.6% | | Cost of revenue | $77,609 | $72,755 | $4,854 | 6.7% | | Selling, general and administrative | $20,298 | $21,490 | $(1,192) | (5.5)% | | Loss from operations | $(12,360) | $(21,842) | $9,482 | (43.4)% | | Net loss | $(16,129) | $(27,854) | $11,725 | (42.1)% | Revenue by Type - Three Months Ended June 30 | Revenue by Type (Three Months Ended June 30, in thousands) | 2025 | 2024 | Change (in thousands) | Change (%) | | :------------------------------------------------------- | :-------- | :-------- | :-------------------- | :--------- | | Jet club and charter | $79,454 | $72,493 | $6,961 | 9.6% | | Fractional ownership | $8,454 | $4,276 | $4,178 | 97.7% | | Maintenance, repair, and overhaul | $2,872 | $2,244 | $628 | 28.0% | | Aircraft management services | $552 | — | $552 | 100.0% | - Cost of revenue increased by $4.9 million (7%), primarily due to increases in overhaul program expense, affiliate lift expense, and salaries/wages, partially offset by a decrease in aircraft repair and maintenance[322][329] - Selling, general and administrative expenses decreased by $1.2 million (6%), mainly due to lower professional fees, advertising, and marketing costs[323] - Interest expense decreased by $1.2 million (21.8%) due to decreased debt[326] Liquidity and Capital Resources Liquidity primarily from financing and operating cash flows, with $15.8 million in cash; management expects sufficient funds for 12 months despite a working capital deficit - Principal liquidity sources are financing activities (equity, convertible debt, Merger proceeds) and operating cash flows, primarily from deferred revenue[330] - As of June 30, 2025, the company had $15.8 million in cash and cash equivalents and $12.2 million available borrowing capacity under the term loan[330] - The company consistently maintains a working capital deficit, common in the private aviation industry, largely due to prepaid flights classified as deferred revenue[331] - Management believes existing cash, operating cash flows, and available borrowings will be sufficient for the next 12 months, but additional capital may be sought for growth[333] - Material cash requirements include debt service, lease and purchase obligations, capital expenditures, and general corporate purposes[331][334] - Short-term expenditures for the next 12 months are anticipated to be approximately $137.4 million, which the company plans to refinance or settle with cash from operations, investment sales, or incremental borrowing[355] Critical Accounting Policies and Estimates This section reiterates critical accounting policies for warrant classification, temporary equity for preferred stock, and accounting for aircraft sales and assets held for sale - Public Warrants, Private Placement Warrants, and Series A Penny Warrants are classified as derivative liabilities and measured at fair value[372] - Series B Penny Warrants are classified as permanent equity because they are indexed to the company's own stock and settled in Class A Common Stock[371] - Series A and Series B Preferred Stock are classified as temporary equity due to redemption rights outside the company's control[373] - Gains or losses on aircraft sales are recognized upon completion, and aircraft held for sale are recorded at the lower of carrying value and fair value less costs to sell, with depreciation discontinued[374][375] Recently Issued/Adopted Accounting Standards This section refers to Note 2 for details on recently adopted accounting pronouncements, including ASU 2023-07 (Segment Reporting) and ASU 2024-03 (Expense Disaggregation) - The company adopted ASU 2023-07, "Segment Reporting," in the fourth quarter of 2024, expanding segment disclosures[75][377] - The company is currently evaluating the impact of ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures," which is effective for annual periods beginning after December 15, 2026[77][377] JOBS Act Accounting Election As an "emerging growth company" under the JOBS Act, flyExclusive uses the extended transition period for new accounting standards and benefits from reduced reporting requirements - flyExclusive has elected to use the extended transition period for complying with new or revised accounting standards as an "emerging growth company" under the JOBS Act[378] - The company benefits from reduced reporting requirements, such as not being required to provide an auditor's attestation report on internal control over financial reporting (Section 404 of SOX)[379] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from interest rates and aircraft fuel costs, with no material changes reported compared to the 2024 Annual Report on Form 10-K - The company's principal market risks are related to interest rates and aircraft fuel costs[381] - There have been no material changes to the market risks disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[381] Item 4. Controls and Procedures As of June 30, 2025, disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting, as previously reported - As of June 30, 2025, the company's disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting[383] - These material weaknesses were previously reported in the Annual Report on Form 10-K for the year ended December 31, 2024[383] - No other material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, apart from ongoing remediation efforts[384] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and exhibits Item 1. Legal Proceedings Legal proceedings, including the Wheels Up Partners, LLC lawsuit, are described in Note 23 "Commitments and Contingencies" of the financial statements - Legal proceedings are described in Note 23 "Commitments and Contingencies" of the condensed consolidated financial statements[386] Item 1A. Risk Factors No material changes to the company's risk factors were reported compared to previous Annual Report on Form 10-K and Quarterly Report on Form 10-Q filings - No material changes to the company's risk factors were reported compared to previous filings[387] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported, nor were any common stock purchases made during the three months ended June 30, 2025 - No unregistered sales of equity securities or use of proceeds occurred[388] - The company did not make any purchases of its common stock during the three months ended June 30, 2025[389] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[390] Item 4. Mine Safety Disclosures No mine safety disclosures were reported - No mine safety disclosures were reported[391] Item 5. Other Information No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers during the quarter - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers during the quarter ended June 30, 2025[392] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including merger agreements, a waiver letter, Sarbanes-Oxley Act certifications, and Inline XBRL financial statements - Exhibits include merger agreements (Amended and Restated Agreement and Plan of Merger and Reorganization, Amendment No. 1), a Waiver Letter, and certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[394] - The financial statements (Balance Sheets, Statements of Operations, Stockholders' Equity, Cash Flows, and Notes) are formatted in Inline XBRL[394] SIGNATURES This section contains the duly signed attestations from the company's CEO, CFO, and Chief Accounting Officer SIGNATURES The report is duly signed by flyExclusive, Inc.'s CEO, CFO, and Chief Accounting Officer on August 13, 2025 - The report is signed by Thomas James Segrave, Jr. (CEO and Chairman), Brad G. Garner (CFO), and Zachary M. Nichols (Chief Accounting Officer) on August 13, 2025[398]